Coconut water has gone crazy in the US and Europe, but there are still key markets waiting to be cracked

Sarah Spickernell is an Online Writer at City A.M. She can be contacted at sarah.spickernell@cityam.com. She is particularly passionate about: Science, healthcare and technology

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Simple lack of innovation could be the problem in untapped markets (Source: Getty)

Coconut water is already a thriving market in the UK and US, but demand for the packaged drink is now spilling out into other countries such as Japan and Canada.

The drink has gained popularity in recent years because of its purported health benefits, which include providing high levels of potassium and other minerals while being low in fat and calories.

According to research by Datamonitor Consumer, it is likely that UK consumption will near 25m litres this year. With popularity growing in Europe and beyond, it is estimated that global consumption will have reached 3.9bn litres by the end of this year.

But Sara Grady, an analyst at Datamonitor, said businesses are focussing too much on established markets and are therefore missing out on ripe opportunities elsewhere. “With the focus very much on the US and Europe, some wealthy, health-conscious markets have been missed out by coconut water brands,” she explained.

High growth in the sector is expected in China, India, Brazil and Japan, with the latter market estimated by Datamonitor to be worth $500m (£333m) by 2019.

Yet there is a widespread reluctance to take the business to emerging markets, wary of what are seen as flighty or sceptical consumers. In some of the more tropical locations, where street vendors will slice open a fresh coconut on the street, there is also a wariness to compete.

But this is starting to change, according to Grady, as consumers see the benefits of packaged water over fresh water: “While some key emerging markets have a strong unpackaged coconut water tradition, there is a growing audience for packaged options in perhaps unexpected regions,” she said.

“Producers investing in markets like India and Brazil should be sure to convey the convenience and hygiene benefits of choosing a packaged drink in order to drive success.”

Indeed, packaged product is already starting to gain ground in Brazil, which indicates that other developing countries with access to fresh coconuts could be persuaded to make the transition.